PS Narasimha appearing for Trai said the regulation was independent of the technical paper but agreed to hold consultations on the issue and get back to the court on the matter.Samanwaya Rautray | ET Bureau | March 18, 2016, 08:14 IST

NEW DELHI: The Supreme Court on Thursday asked the telecom regulator whether it would consider changing its mind about penalising phone companies for call drops because a technical paper issued by it seemed to contradict the ruling made on October 16 last year.

"Prima facie, it appears that your technical paper says that telecom companies are not responsible for call drops," said Justice RF Nariman after it was brought to the attention of the bench by Kapil Sibal, the lead lawyer for the phone companies. "You cannot shy away from it."

The Supreme Court bench, comprising justices Kurian Joseph and Nariman, is hearing the phone companies’ challenge against the penalty that has been upheld by the Delhi High Court. The Telecom Regulatory Authority of India (Trai) will examine the issue during the court’s Holi recess and revert at the next hearing of the case scheduled for March 30.

Additional solicitor general PS Narasimha appearing for Trai said the regulation was independent of the technical paper but agreed to hold consultations on the issue and get back to the court on the matter.

"The issue is part-heard, they are still arguing their case," Narasimha told ET. "We were only asked to get instructions on whether the regulation took into account the implications of the subsequent technical paper." The Cellular Operators Association of India (COAI) lobby group said it was too early to say how the case would be decided.

"We wish to emphasise that this is part of the continuing arguments being made before the SC by the parties," COAI director general Rajan S Mathews said in an email. "It would be premature to infer from this how the SC will ultimately dispose of the case. We therefore caution against inferring any conclusion in this matter at present." Sibal, who’s being assisted by Mahesh Agrawal, said the technical report had absolved the companies of blame and instead attributed call drops to external factors such as lack of spectrum, problems in setting up towers in heavily crowded areas, difficulties in getting permission from municipal authorities on right of way, stringent emission norms (for diesel generators) and interruptions due to defence and neighbouring countries etc.

Trai has ruled that companies should compensate users at the rate of Re 1 per dropped call subject to a cap of three a day. The companies say this is unfair and will exact a massive toll on them. "If we prosper, the consumer benefits," Sibal said in court on Thursday.

"If you impose such a penalty, we are busy with litigation. The sector does not prosper… We can certainly be blamed for a lot of things, but it is equally true that we brought in a telecom revolution in the country.

At one point of time, I was being chargedRs 32 per call."

Development will be hit, he said. The industry was planning to lay fibre optic cables connecting every village at the cost of Rs 20,000 crore.

"But we have to now work in an atmosphere of inspector raj… You can’t beat us up like the poor horse," Sibal said, making a reference to the alleged attack on a horse by a BJP legislator in Uttarakhand, prompting a sympathetic "The horse, poor chap," from justice Nariman.

Sibal went on: "These are our problems. You can’t penalise us. That is not the way forward."

He argued that if call drops were due to factors beyond anyone’s control, how could telcos be penalised. In any case, if call drops are more than 2 % per day, phone companies can already be penalised by Trai, he said.

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